Rose Petroleum plc increases acreage in Paradox Basin, Utah
Rose Petroleum plc, the AIM quoted natural resources business, has announced that it has increased its land position in the Paradox Basin, Utah, with the acquisition of an area of what the Directors believe to be highly prospective new acreage.
The Company has acquired a 75% working interest in an additional 3,320 gross acres (2,490 net acres) in the Paradox Basin for $36 per gross acre, resulting in a total consideration of approximately $120,000, which will be satisfied from the Group’s existing cash resources. The Company’s joint venture partner, Rockies Standard Oil Company has confirmed that post the acquisition of the new acreage, the Company is earning-into a 75% working interest in a total of 79,577 acres in the Paradox Basin.
The acquisition of the new acreage has been achieved through careful planning between the Company and RSOC. The acquisition has been made pursuant to the Company’s earn-in agreement with RSOC, further details of which were announced on 19th September 2017.
Following detailed technical analysis and given its geological potential and close proximity to the Joint Venture’s existing acreage, RSOC formally nominated the acreage for auction. On receipt of the nomination, the Utah Bureau of Land Management formally put the acreage up for auction, and the Joint Venture was then able to acquire the acreage at the resulting auction.
Of particular significance, the new acreage all falls within the area covered by the Company’s recent 3D seismic survey, for which the Company now has all the structural interpretation, and Rose’s management is excited by the potential of this new acreage. Multiple highly attractive geological structures and potential well site locations have already been identified on the new acreage. On the basis of preparation of the previous resource reports prepared for the Company by third-party consultants, Ryder Scott Company, Rose’s management believes that there may be unrisked resources of 5.5 million barrels of oil equivalent (“mmboe”) on the new acreage in the Cane Creek reservoir zone alone. To elaborate, the Paradox Formation is made up of approximately 24 clastic zones, of which the Cane Creek reservoir zone is the primary producing zone of the basin to date. Additional clastics, above and below the Cane Creek reservoir zone, are also thought to be prospective so there are potential resources significantly in excess of the 5.5mmboe in the acreage.
The prospectivity of the new acreage is underpinned by the existence of the producing 28-11 well which is only 365 metres to the south of the new acreage. The 28-11 produced out of geological structures that occur on the new acreage and over the life of the well it produced over 141,000 BOE. These factors give management a high degree of confidence in the potential of the new acreage.
Matthew Idiens, CEO, commented: “We are delighted that we’ve been able to acquire this new acreage, which we believe to be highly desirable. The fact that we have already completed the 3D seismic survey on this acreage is of particular significance as we have already determined its significant prospectivity. Multiple drill site locations have already been identified on the acreage and we believe the acreage has the potential to produce several million barrels of oil.
“We have known about the auction for this acreage for some time and we are thrilled to have secured the acreage for such a reasonable price. We were concerned that the very strong initial results from the seismic survey on our adjacent existing acreage might push up the price of this acreage significantly.
“We believe that we now have an impressive portfolio of acreage in the Paradox Basin, and we look forward to progressing negotiations with potential partners with a considerably stronger proposition.”